Thomas Cook teetering on the brink

By Kate Holton

The British Government has plans in place to bring home stranded UK holidaymakers if Thomas Cook goes out of business, an event that would likely spark chaotic scenes at resorts and airports around the world.

The bosses of the world’s oldest travel company were still meeting lenders and creditors in London last night to try to thrash out a last-ditch deal to keep the company afloat. The company’s board was meeting to decide the company’s fate, with it potentially going into administration this morning

Running hotels, resorts, airlines and cruises, Thomas Cook has 600,000 customers on holiday, meaning governments and insurance companies could be forced to step in and bring them home if the company goes out of business.

Trade unions and the Labour Party have urged the British Government to stump up the cash, but the UK’s foreign secretary appeared to dismiss that idea.

“We don’t systematically step in with the taxpayers’ money when businesses are going under unless there’s a good strategic national interest,” Dominic Raab said, adding that plans were in place to prevent anyone from being stranded.

The company, founded in 1841, has been fighting for its survival after its lenders threatened to pull the plug on a rescue deal that has been months in the making.

Hurt by high levels of debt, online competition and geopolitical uncertainty, Thomas Cook needs to find another £200m (€226m) on top of a £900m package it had already agreed, to see it through the winter months when it needs to pay hotels for their summer services.

At the meeting the company was asking its lenders to restructure or lower their demands. It has also asked credit card companies to release £50m that they hold as collateral against the company’s bookings. The company’s largest shareholder, China’s Fosun, was due to take a central role in the restructuring.

One estimate puts at around £600m the cost of the UK Government and the country’s aviation regulator’s plan to bring home holidaymakers. There are also around 460,000 non-UK nationals potentially stranded by Thomas Cook.

Reuters